Homeowners get paid to share solar and battery power with the grid

More and more homeowners are being paid to use rooftop solar panels, battery storage and electric vehicles, helping prevent power outages and clean the grid.

Their home renewable energy is being networked to create “virtual power plants” in states like California, Vermont, Texas and Utah, where energy agencies and utilities use the resources to meet peak electricity demands during extreme weather. These VPPs cut costs and keep dirtier “peaking” gas-fired power plants, which are typically used for emergencies, offline. In return, homeowners receive anywhere from a few hundred dollars to as much as $10,500 per year, depending on the program.

GoodLeap, a company that finances and develops software for sustainable energy systems in homes, launched its own VPP program this summer in California, aggregating 200 of its customers’ batteries. The storage capacity is shared with a statewide grid support program run by the California Energy Commission. So far, the batteries have helped mitigate six “stress” events since July, including during a heat wave, GoodLeap said. The company has offered customers up to $350 this year to participate, and GoodLeap is paid by the state program at staggered monthly rates.

While versions of VPP have existed for years — including utilities adjusting thermostats and water heaters to save energy — what’s new is the growing adoption of home solar panels, battery storage, and EV chargers that can feed power back into the grid. The extra capacity is critical at a time when extreme heat and storms are causing more power outages and electricity demand is soaring in data centers and the U.S. manufacturing boom.

The Energy Department has estimated that between 2023 and 2030, the United States will need to add enough capacity to meet more than 200 gigawatts of peak demand, comparable to about 200 nuclear power plants. At least 10% to 20% of that demand could be met by VPPs, which have large untapped potential across the United States, while saving about $10 billion in annual grid costs.

“We’re still in the single digits in terms of the percentage of homeowners who have solar panels and battery storage in the U.S.,” Dan Lotano, GoodLeap’s chief strategy officer, told Business Insider. “As utility rates continue to rise and technology costs continue to fall, I’m optimistic about where this market could go. And now we’ve added value to homeowners that they didn’t have access to before.”

GoodLeap’s entry into the VPP market lags behind home energy competitor Sunrun. The company already has 16,200 customers signed up for the California Energy Commission’s program, which launches in 2022. Sunrun has amassed enough battery capacity to match a natural gas “peaking” power plant or take the entire city of Santa Monica off the grid, according to Chris Rauscher, Sunrun’s head of grid services and VPPs. Sunrun in California automatically enrolls customers, who are paid $100 per year, while also ensuring the batteries maintain at least a 20% charge in case people need backup power.

“We’ve been called all summer,” Rauscher said.

Sunrun is also working with three owners of an all-electric Ford F-150 Lightning in Maryland to test its ability to power homes during peak demand in the summer to reduce strain on the grid. The truck owners are customers of Baltimore Gas and Electric Company.

Brian Foreman is one of the first users. In late June, after several months of using Ford and Sunrun’s troubleshooting software, the battery in Foreman’s Ford-150 began powering his home during the peak hours of 5 to 9 p.m. each night. Foreman said he paid $9,200 to install the two-way power system and now earns $500 a month to participate in the pilot this summer through September.

“I feel like I’m contributing to making the network more resilient,” Foreman told BI.

Some utilities are turning to VPPs for several reasons. In 2020, the Federal Energy Regulatory Commission, which oversees interstate electricity markets, required grid operators to develop plans to integrate rooftop solar, battery storage, electric vehicles and homeowners’ smart energy devices into the market. Many utilities also have struggled to meet renewable energy targets, in part because it takes a long time to build large infrastructure projects in the U.S. and connect them to the grid.

“It’s really hard to build solutions at an industrial scale,” Sunrun CEO Mary Powell told BI last month. “I said a long time ago that we went from NIMBY to BANANA, which means ‘build absolutely nothing near anyone.’”

“I think all the arrows point to innovation,” Powell added. “Let’s use technologies that are more cost-effective because they’re paid for by the customers who install them.”

Before leading Sunrun, Powell was president and CEO of Green Mountain Power, Vermont’s largest utility. The utility’s power supply is already 100% carbon-free, including renewable and nuclear energy, and has been a pioneer in VPPs since 2015. This year, Green Mountain Power began subsidizing some customers who installed battery backup, provided they shared it during peak hours.

The program has grown to more than 4,000 batteries with a capacity of nearly 70 megawatts — about the size of a larger gas-fired power plant in the state, according to Kristin Carlson, vice president of strategy and external relations for Green Mountain Power. In recent years, the utility has saved about $3 million annually, which is passed on to all customers. Homeowners can receive up to $10,500 upfront to buy and install their own batteries, or $5,500 for two Tesla Powerwalls, provided they participate in the VPP for 10 years.

“Because we can use our virtual power plant, we don’t have to buy expensive and often dirty power from the regional grid,” Carlson said. “We’ve been able to retire two fossil-fueled peaking plants. That’s reduced our carbon emissions.”